Correlation Between JPMorgan Chase and Digimarc

Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and Digimarc at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining JPMorgan Chase and Digimarc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JPMorgan Chase Co and Digimarc, you can compare the effects of market volatilities on JPMorgan Chase and Digimarc and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in JPMorgan Chase with a short position of Digimarc. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and Digimarc.

Diversification Opportunities for JPMorgan Chase and Digimarc

0.6

Correlation Coefficient

JPMorgan Chase  Digimarc

Poor diversification

The 3 months correlation between JPMorgan and Digimarc is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Digimarc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digimarc and JPMorgan Chase is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on JPMorgan Chase Co are associated (or correlated) with Digimarc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digimarc has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Digimarc go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Digimarc

Considering the 90-day investment horizon JPMorgan Chase Co is expected to under-perform the Digimarc. But the stock apears to be less risky and, when comparing its historical volatility, JPMorgan Chase Co is 3.72 times less risky than Digimarc. The stock trades about -0.02 of its potential returns per unit of risk. The Digimarc is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  3,326  in Digimarc on October 7, 2024 and sell it today you would earn a total of  1,355  from holding Digimarc or generate 40.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

JPMorgan Chase Co  vs.  Digimarc

JPMorgan Chase

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, JPMorgan Chase displayed solid returns over the last few months and may actually be approaching a breakup point.

Digimarc

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Digimarc are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Digimarc exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JPMorgan Chase and Digimarc

The main advantage of trading using opposite JPMorgan Chase and Digimarc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, Digimarc can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Digimarc will offset losses from the drop in Digimarc's long position.

The idea behind JPMorgan Chase Co and Digimarc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.